Nope. Instead of those things, a group of concerned Vermonters calling themselves “Vermonters for a New Economy” have decided that the primary answer to the problems above is a bank.

Yep. A bank. But not just any bank. A state bank. Meaning a bank that is funded, and backed, to one degree or another by public funds (the funding issue is just another one of those thorny details that no one really needs to think about, just yet). Which means, of course, that any risk or liability falls directly upon the shoulders and wallets of those who pay taxes.

And what is their mission statement? Their raison d’etre? Here it is:

Vermonters for a New Economy is a coalition of organizations, businesses, and individuals working to create a new economy for Vermont. You can work with us to design and enjoy the new ways we are owning and operating businesses, banking, exchanging goods and services, financing projects, and earning income. This work enables us to pursue regenerative economic activities that strengthen our food systems, build renewable energy, reuse and recycle byproducts, and foster creativity, culture, and healthy lifestyles.

I must have missed Banking 101, but I’m pretty sure the bank didn’t ask me about my healthy lifestyle choices when I applied for a mortgage. They wanted some details around income, liabilities, etc., because they’re crazy like that. But no mention of how their capital would foster my creativity. Which is mildly disappointing. It’s also fantastic that they’re allowing Vermonters to work with these New Economists as to how Vermonters earn their own incomes.

That’s generous of them.

But let’s let the New Economy Vermonters provide more of their own detail, in terms of why they think we need a state bank:

Our Planet — a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future

Students — to access low interest education loans.

Homeowners — to get mortgages and home loans from the bank.

Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.

Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.

Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers

Well, that’s quite a bit to digest, so let’s take it one at a time:

1. Our Planet — a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future.

The planet. So the planet needs a Bank? How did the planet exist, then, before humans evolved? Did Gaia patiently wait for first humans to evolve, then banking, in order to provide a high enough state of enlightenment before asking for funding? Gaia’s patience here with us is considerable.

So the federal government can’t do it, with virtually limitless resources, but Vermont can, now, because of one bank?

In fact, VSAC has said it’s “agnostic” on the idea of a state bank. So why list student loans as a justification, when the one institution that has historically provided student loans doesn’t see the need?

When the CEO of VSAC says they don’t need additional access to capital, maybe you should remove that selling point from your website.

3. Homeowners — to get mortgages and home loans from the bank.

You can already get loans from banks, easily – they’ll happily lend you money for a house, or equity loans. It’s how they make money. For FHA loans, you only need 3.5% down. Rates for fixed 30-year FHA loans are well under 4%. Do Vermonters not know how to apply for a loan, and the state bank will save them from their own ignorance?

And why the incentive to increase – via public funds – the number of mortgage lenders, increasing competition, when, in many cases, the same people who tout this state bank (like Bernie Sanders) want to decrease competition in other markets, like health care? Why is it a good thing to increase competition in one place, but not the other?

4. Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.

They can get this already from existing banks and investors. What would a state bank provide that does not already exist? Other than offering riskier loans that will be backed by taxpayers? There’s a federal Small Business Administration that offers many channels for funding. What would this bank offer that’s not already available?

5. Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.

Municipalities already have access to funding through banks and bonds. Like the Vermont Municipal Bond Bank, which has been in place since 1970. If municipalities already have access to low-interest funding source, why do they need another one?

6. Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers.

You mean like the benefits current federal taxpayers enjoy, like $20 trillion in debt? The profit the bank makes is the interest on the loan, which, for the federal government, increases as a percentage of total spending, and if the rates increase, even a little bit, will start to crowd out all other discretionary spending.

Which is really the heart of the matter. The supporters of the state bank are looking for a way to finance spending now that someone else will have to pay for later. It’s like giving a college student a credit card with no limit. Sooner or later that bill will come due, and the people who want to create and support that state bank will then be asking taxpayers to bail it out, just like some other large financial institutions, like Freddie and Fannie. Which have become, more or less, nationalized.

But the worst of the justifications for the proposed bank’s existence are in its own supporting documents, which make a few claims of fact that aren’t supported by reality. A few examples (page 6):

Assumptions made reality by simply writing them down.

Sub-prime mortgages are what Fannie and Freddie specialized in, and still continue to be the largest generators of these types of loans in the industry. Taxpayers had to bail out their poor business practices and the fact that they were understating their sub-prime exposure; there is nothing in the call for a state bank that would prevent this from recurring.

Secondly, citing Vermont’s low unemployment rate as evidence of economic stability means they either a) willfully ignore the reality of Vermont’s declining workforce participation rate, or b) don’t understand what they’re talking about. If they’re using this conclusion (below) as one of the underpinnings of the justification for the need for a state bank, they’re making a significant error:

Well, it does when we argue that the state’s economy is in great shape based on unemployment data. Then it’s ok to make that correlation argument.

If anything, the state’s demographics and the general leveling off of already-high housing prices won’t require a state bank to support increased demand for mortgages. In fact, the reason housing prices are (relatively) level is because demand isn’t increasing. There are simply fewer Vermonters looking to buy homes:

Vermont’s economy, and its housing market, are clearly not divorced from national trends. But our housing market seems to be under performing the national housing market, which is worrisome. Over the last two years, Vermont’s housing market, at least measured by prices, has gone nowhere. Nationally, prices are up 7 percent over the same period—not great, but at least it’s a positive number.

One of the reasons for our weak housing market is our underlying demographics. First-time home buyers tend to be in their 30s and early 40s. That’s precisely the demographic that’s shrinking in Vermont. And if there are fewer first-time home buyers, people trying to sell their houses and trade up to more expensive homes can’t find buyers. That clogs up both sides of the home-buying and home-selling market, limiting both sales and price appreciation.

The New Economy site also encourages readers to read the study that justifies the new state bank. Hilariously, the study recommends that the state not implement a state bank. That the capital needs are already met. That the current options available for financing are just fine. From page 3:

So…we *don’t* need a state bank, then? Oopsy!

Then what is the purpose of the New Economy site? To ignore the realities of Vermont’s business climate, Vermonters’ incomes, the demographic changes, and historical policy overhangs that make the state a lousy place to do business? Another bank won’t fix that. Another bank can’t fix that.

Only Vermonters can fix Vermont, by dismantling the policies and governmental apparatus that have put them in the place they are today. If that’s part of the New Vermont Economy, then maybe things will start to change.

The Department of Public “Service”, that same wonderful entity that helped bring about the shuttering of Vermont Yankee, which had the happy result of increasing electrical costs and dependency upon non-locally-generated power, now suggests, strongly, that Vermonters start moving into caves:

Giving up some rural landscapes for solar arrays, sharing cars and driving less, and generally using less cheap oil and gas are all in order if the state has any hope of achieving 90 percent renewable energy usage by 2050.

This was the message of the DPS at a public forum held at the Vermont College of Fine Arts on Tuesday morning. Included in the crowd of about 100 were some state legislators and energy professionals.

The forum allowed the public to provide input on the standards the DPS must create per Act 174 of 2016 for ensuring consistency of regional and municipal plans with state energy policy.

In other words, like with schools, you can create your own policy, as long as it conforms to what the state is going to tell you to do anyway.

Director of the Planning and Energy Resources Division of the DPS Asa Hopkins led much of the initial presentation. He said that eventually communities should create maps that overlay what he categorized as primary and secondary constraints for alternative energy development.

Oooh! Maps! To where the buried energy treasure lies? Oh, no, wait. Not the fun kind of maps. He means anything (more or less) found outside:

So, in other words, you’re required to make renewables part of regional energy planning but you can only do so within the state’s proscribed box o’ places to site said energy sources, like solar, else the sky falls in and bad things will happen. In the form of penalties.

Hopkins suggested a shift from oil and gas to renewables would mean, from an economic perspective, a shift away from operating costs (primarily fuel) into capital costs (infrastructure). He suggested the overall aggregate of energy costs should stay relatively the same, give or take about 5 percent.

Funny, that’s as much as the electric rates for Vermont Yankee went up (5%) when the Vermont legislature decided that it could decide whether or not Vermont Yankee could continue to operate, because as every Vermonter knows, all legislators are highly experienced energy professionals with decades of knowledge to back up their decision-making:

Vermont’s three largest utilities use about one million more MW/H of “system power” now than in 2011 (before the March 2012 expiration of Vermont’s utilities’ contract with Vermont Yankee which provided about one-third of the state’s power). System power is the term for electricity bought from the New England transmission grid, and is comprised mostly of fossil fuel power (especially natural gas), as well as some nuclear, hydro and renewable power. Green Mountain Power, Burlington Electric Dept., and Vermont Electric Coop use 1.8 million megawatt hours of “system power.” In 2011 the same three utilities used 847,000 Mw/h of system power, according to the “Utility Facts” study released in February, 2013 by the Vermont Department of Public Service.

Over the 12 months from December 2011 to December 2012, Vermont’s electricity prices rose 5.1 percent, according to the EIA. During the same time period, rates in New York and every other New England state (except Rhode Island) decreased.

In the same way that Vermonters are being told that they will a) adhere to the state’s incalculably stupid energy policy (which is really just a

The latest in Vermont’s new hi-tech homesteads! No power required!

vehicle for politicians to use to get elected), they’re also told that b) it really will only cost 5% more.

Just like when Vermonters were told their health care insurance costs wouldn’t go up much (in fact, they were told it would go down), it would be easier to enroll, and they would have more choices. In that regard, it’s not so much as accepting the lie itself that the state is telling you, it’s that you get to choose which lie you want to believe in. That’s classical market thinking, Progressive-style.

Not mentioned by the state’s Progressive Peoples’ Brigade are the hard and unyielding economic realities of cost: When the cost of something goes up, less of it is demanded, and that rule goes for power, too. Except for local businesses, which are small and depend upon the general economic vitality of Vermont to keep food on the table – and a booming travel industry – bigger businesses can and will move, to places that aren’t apparently out to shutter them. While politicians like Peter “Thanks, I’ll Quit While I’m Barely Ahead” Shumlin tout the state as a “great” place for jobs, the hard smack of reality is that the bulk of job growth is in service jobs, which are not well-known for their high rates of pay.

Electricity is a cost in every economic activity, but especially manufacturing. The price and reliability of electricity are critical factors in the manufacturing business model. Even the Shumlin administration, which had previously worked to not cut IBM a break, finally decided that the rates were an issue in 2014 – well after IBM had already voiced its concerns.

Chris Recchia, commissioner of the Department of Public Service, said the rate freeze was particularly important this year for IBM.

“It is no secret that they are struggling,” Recchia said. “And a rate freeze for them was going be very helpful for additional planning in the coming years.” Though the freeze doesn’t prevent IBM from leaving the state, he said, “I think they would describe it as every little bit helps.”

No kidding. You think so, Chris?

IBM said in testimony to the Public Service Board that electricity rates in New York are much lower than they are in Vermont. And New York has “made an aggressive push” to attract high-tech businesses like GlobalFoundries, the tech company rumored to be considering the purchase of IBM’s Essex plant.

“Competitors in other geographic areas are paying electric rates significantly lower than IBM Vermont’s rates,” said Nathan Fiske, an IBM site energy manager, in prefiled PSB testimony on May 30. “Our competitive disadvantage, as a result of the higher electric costs paid by IBM Vermont, is very substantial.”

Which is one of many many reasons why Fab 2000 is now sited in New York, not Williston, Vermont, providing jobs to New Yorkers instead of Vermonters (not including the Vermonters who moved there to find a new job in the new fab, part of Vermont’s economic exodus).

But now, finally, the state has come clean: It wants a diminished future for Vermonters, mandated from a central planning agency. How this

Not pictured: Chowderheads frantically dialing the power company when the rolling blackouts start. In January.

translates out to Vermonters in the real world, though, might not quite align so nicely with the Vermont Progressive Utopia:

A recurring theme in one of the discussion groups was “One-size-fits-all is a difficult standard to work with,” as Judith Jackson of Irasburg put it.

State Rep. Joseph Troiano, D-Stannard, reiterated as much. He said Stannard has of a population of only about 150 people, with no paved roads and certainly no public transportation. Residents are spread out and they go to work in different directions, so any notion of ride-sharing is pretty much off the table.

Vermont is in the bottom half of states for population density. Add in the fact that for half the calendar year there’s the real possibility of snow and ice factoring into transportation decisions, and you’re not really likely to see someone from Buel’s Gore biking to work in South Burlington, and, well, this “plan” starts to seem irrationally optimistic.

Moving a weak and demographically shaky economy to one that has less predictability in access to electricity, with uncertainty in rates, does not equal a massive influx of speculative capital, in search of Vermont’s next big economic success story. The Ministry of Truth, in the form of the DPS, is doing a painful disservice, again, to the people of Vermont, that it purports to represent.

We work to advance all Vermonters’ quality of life, economy and security through implementation of our statewide energy and telecommunications goals, using sound statewide energy and telecommunications planning, strong public advocacy of the public good, and through strong consumer protection advocacy for individuals.

So which is it? A reduction in the standard of living to adhere to the bureaucracy’s latest 5-year plan, or working to advance all Vermonters’ quality of life?

The slowest economic recovery in post-WW2 history will likely continue in FY16 and FY17, with some acceleration bringing slightly above-average revenue gains, though very close to previous expectations. Virtually all of the current changes in General Fund revenues relative to the prior January forecast, per the below chart, are the product of statutory changes made in the last legislative session, and represent about $30 million in new tax revenues.

So the budgetary forecast wasn’t “fixed” based on significant reductions in YOY spending, nor by accelerated economic growth. The General Fund revenue growth is all based on new taxes.

These tax changes primarily impact the General Fund, with the largest tax changes affecting personal income and sales taxes. Without these new tax revenues, the General Fund would have increased by about $9 million in FY16 and declined by about $1 million in FY17, relative to January projections.

But even this outlook has its caveats, as indicated near the end of the report, specifically regarding the General Fund (the largest revenue source in the budget), on Page 15 (1st paragraph):

As illustrated in these tables, and consistent with past projections, longer term revenue growth from the mix and structure of the taxes in the three funds analyzed herein is unlikely to keep pace with recent levels of expenditure growth (emphasis added).

In other words, tax revenue growth rates do not match expenditure rates, which means the state is still consistently budgeting to spend more than it takes in.

But the real impact of Vermont policies is being felt where it’s always felt – in the lives and pockets of working Vermonters. The forecast cites the low unemployment rate Vermont is “enjoying”, as if that constitutes evidence of some kind of recovery:

Vermont employment growth has also strengthened in recent months, with year over year growth in the past 12 months accelerating to 1.4%, vs. 0.7% in the preceding 12 month period. This has pushed the State unemployment rate to 3.6%, the lowest in New England and the fourth lowest in the U.S.

Vermont employment has increased in recent months, but compared to historical employment levels the state is still an employment trainwreck. The number of employed Vermonters, what the state’s forecast calls “employment growth” has increased from prior months, to 336,550 in June 2015. In January 2015, that number was 334,550, so clearly some hiring is occurring.

But to put this in a larger perspective, the last time Vermont had 336,550 employed, it was October 2012. In other words, it’s taken Vermont 2.5 years just to climb back to 2012 levels of employment.

To give it more of a historical perspective: What was Vermont’s highest employment level in the last 10 years? 344,150, in April 2006. Which means Vermont now has roughly 8,000 or so fewer people employed now than 10 years ago.

Vermont’s labor force – the number of people available and willing to work – has shrunk in almost direct correlation to the decrease in employment numbers. The labor force in April 2006 was 356,700. In June 2015, the labor force is 348,950, a difference of -7,750. This is why Vermont’s unemployment rate in April, 2006, of 3.5%, looks so much like June 2015’s unemployment rate of 3.6%, even though we have about 8,000 fewer people employed.

To put this a bit more painfully, Vermont has lost an average of 800 jobs every year for the last 10 years.

So while the state’s latest forecast loudly touts the low unemployment rate, it neglects to mention that a) the total number of Vermonters employed is at historical lows, and b) the labor force itself has shrunk.

A shrinking labor force is not an indication of economic health. It’s an indication that there are fewer opportunities for employment in the state.

Oddly, the report also discusses income inequality (page 7 of the report), as if a more equal distribution of wealth is a desired goal, and discusses the “owners of capital” as if it’s straight out of the Marx/Engels reader. But as more and more people drop out of the labor force, it’s entirely unsurprising that incomes are reduced. In fact, since the state’s own long-term labor forecast calls for the largest job growth sectors to be in the service industry, whatever policies the state has been putting into place to improve the economy, and thereby the incomes of Vermonters, is not working.

By the state’s own admission, its economic policies are having the opposite of the desired effect:

Incomes are down in the recession – so let’s fix that by raising taxes!

The report goes on to state:

Income growth has become increasingly concentrated among the highest income groups over the past 30 years and this has continued during the current economic recovery. past 30 years and this has continued during the current economic recovery. Between 2009 and 2012, recent studies estimate that virtually all real U.S. income growth accrued to the highest 1% of all income tax filers. These same analyses, however, suggest that in Vermont, income inequality has not been quite as pronounced, with income growth among the top 1% during this same period of 21.8% vs. growth among the bottom 99% of about 4.6%. They also suggest that longer term income inequality, though growing from lows in the late 1970’s to levels in 2012 not seen since the late 1920’s, are similarly less pronounced in Vermont than in the nation as a whole.

So income growth is only good if it’s at the lowest income groups? Considering that the highest income groups pay the vast majority of income taxes collected, is the state arguing for reduced incomes at the highest levels so things are less “unequal”? How will budget gaps be filled when the rich are no longer quite so rich? Since half the country pays no net income taxes, how, exactly, would increased state expenditures be paid for if the 1% didn’t have increased incomes?

As the report says on Page 11:

The increasing volatility in revenues due to a growing reliance on Personal Income,

Deep thoughts for a Vermont legislature.

Corporate and Estate taxes, was on full display in both FY14 and FY15. In FY04, these three tax categories comprised 50.6% of Available General Fund tax revenues. In FY15, they represented 60.9% of revenues, and are expected to exceed 62% within the next five years.

So while bemoaning inequality, the report also states Vermont has become and is increasingly becoming reliant on personal incomes to constitute the bulk of General Fund revenues. Shouldn’t the state, then, be celebrating wage inequality? Who else is going to fund the General Fund?

The state’s forecast now shows that the anticipated budget will be in the black, but so did the prior years’ budgets, which sometimes required a budget recission one month after the budget was passed. When the legislature scrambles to find yet another tax, this time in the form of one on sugary drinks, one which places both an additional cost of compliance on the backs of business owners and increases the aggregate tax burden on Vermonters, and then counts itself as a fiscal hero for doing so, the environment is created that assumes that this is the way budgeting and the state’s economy should work. In other words, Vermont will see these same steps taken again and again.

What’s really happening is that the state is patching holes in a sinking ship, and is running out of things to patch it with. What doesn’t help is the state’s continuing demonization of those who pay the majority of the bills in the state, and who will share an ever-increasing burden of doing so.

Like this:

Winners. They do whatever it takes to win. If that fails, then they go back and try to change the rules so they can win again. Putney’s semi-favorite son, Governor Peter Shumlin, recently suggested that Vermont change its Constitution so big guys like Peter who can’t seem to convince Vermonters as to how fantastic a job they’ve done as governor can get a pass when it comes to, well, getting elected:

Hey, those tax revenues are looking great!

The Vermont Constitution should be changed according to Governor Peter Shumlin, D-Vermont.

He made the comment after the tight race for governor that will be decided by lawmakers. Shumlin suggests that any statewide candidate who wins a plurality over 40 percent is deemed elected. The current law is 50 percent. And since Shumlin did not get there on election night, lawmakers will decide the winner on Thursday. Shumlin also questions whether Republican Scott Milne is prepared to govern if he wins the legislative vote.

“We have faced our share of setbacks in the past couple of years, and I know people are disappointed in how I have handled some issues,” Shumlin said. “I recognize I have work to do to regain the confidence of many Vermonters in the coming weeks and months. I will work with my team as well as legislators from all political parties to assess our coming legislative agenda to ensure that we are representing the will of Vermont voters.”

– is now using this convincing language (below) to tell us all how critical it is that he get back to the fine work of dismantling the state’s economy, er, passing a budget:

“I mean I gotta tell you, how hard we’re working here to try to get a sensible budget, we put together a team before we got here, but we would be scrambling to put a team together, Government would literally be paralyzed while this candidate tried to suddenly pull it all together in a really short time,” said Shumlin.

Is this the team that “scrambled” to put the original budget together?

Then let’s take a look at the last budget Shumlin put together, since he thinks it’s critical that he does this again, because, y’know, he’s got a “team” and all. The same budget that, based on the Governor’s own proposed budget assumptions, forced the legislature back into session one month after the budget was passed to make budget cuts, cuts forced by declining tax revenues that stubbornly refused to adhere to the governor’s forecast. That budget was built on the consensus budget, one using forecasted revenue growth percentages that can only be described as “optimistic”. Another way of describing them might be “catastrophically stupid”, and the result has been yet another call to cut the budget. The same budget that Peter so proudly touted last year, and now Peter says his experience in putting a budget together is the reason to vote for him over Milne?

Since Shumlin’s going to tout his simply fantastic record – a record that earned him just a bare percentage point or two more votes than his competition, compared to a couple of years ago when he was winning by 10-20 basis points – let’s look at the latest unemployment numbers (prepare to put on your shocked face).

While the unemployment rate dropped a tenth of a percent from October to November 2014, and the number of unemployed is down, there are still 100 more people unemployed in November 2014 than there were in November 2013. Shumlin’s economic miracle, perhaps, or perhaps his current budget is on fire because he has no idea what he’s doing:

Mediocrity unchained.

Vermont’s legislature will now be forced to vote for Vermont’s next governor because the sitting governor, the incumbent, couldn’t muster enough votes, after getting his signature legislation passed and put into place, to beat a Republican candidate who came in very late in the race, had just a fraction of Shumlin’s campaign spending to rely on, and had little name recognition.

Shumlin fears that government would be “paralyzed” if Milne were elected. What Shumlin fails to understand, and never will understand, is that a government that does less – especially as Shumlin’s destructive record attests – might be the best thing to happen to Vermonters in the last 4 years. Funny how Shumlin never seemed to be paralyzed when it came to raising money for his campaign, and traveling all around the country seeking out-of-state donations.

I guess being “personally humbled” means something different to Shumlin than it does to the rest of us. As Calvin Coolidge once said, “No man ever listened himself out of a job.” If Shumlin heard a message loud and clear last November, as he told us he did, then why is he almost out of a job?

Like this:

Paying for health care, no matter what the payer vehicle is, is simultaneously a complex and simple idea. Costs are incurred when care is delivered, and someone has to pay for those incurred costs. How that payment occurs, however, is the crux of the issue, and has become more of a political football than a rational discussion about costs, revenues, and the delivery of care.

Gov. Peter Shumlin will unveil his single-payer financing proposal later this month. But a powerful Senate lawmaker says the Legislature might want to spend less time this year talking about how Vermont pays for health insurance, and focus instead on making sure everyone is getting it.

Few people in the Legislature will have more influence over the health care debate in than Sen. Tim Ashe. The Chittenden County Democrat not only chairs the committee that handles tax matters for the Senate, he’s also the Senate President’s most trusted advisor on health care reform matters.

Ashe says he isn’t necessarily opposed to pursuing a publicly financed health care system. But he says the payroll tax on employers that would be needed to fund it will make it a difficult goal to attain, at least in the short term.

Why isn’t everyone smiling?

Senator Ashe well understands that the payroll tax will not only fail to raise enough money to cover the estimated $2.2 billion required to finance Governor Shumlin’s single-payer plan (and $2.2 billion is the low end of the estimate), it will also have a potentially catastrophic effect on small businesses, as they will not be able to absorb that large of a cost increase.

If you remove the idea of insurance from this requirement, and just think of it as a cost that gets added to a business with no offsetting revenue, then those businesses that are already operating at the barest margins of profitability will slide into the red. Businesses that can absorb this cost are largely providing insurance coverage already; those that cannot, will not, and it will either force businesses to cut costs, staff, hours, and/or force Vermonters onto the state exchange. Which is likely the goal, anyway, to make all Vermonters, regardless of current coverage, to enroll in their state-mandated insurance coverage through the state.

Senator Ashe keeps the idea simple, which is a good place to start:

“I believe people across the political spectrum believe that every person in Vermont should have health insurance,” Ashe says. “So, I believe that at a minimum we should come out of this legislative session with a plan for how we’re going to get everybody health insurance.”

Here’s what I believe – I believe having insurance does not make one healthy. I believe having insurance does not guarantee access to medical care. I believe having insurance does not affect what decision a doctor makes in the emergency room and the patient is bleeding out. I have auto insurance, but that won’t stop me from getting in an accident.

“I believe, I happen to have a radical belief, which is that we can provide insurance to every person in Vermont without raising a penny,” Ashe says.

Assuming you can increase the number of people covered under insurance without increasing the cost of said insurance does not make sense. Would that make sense if the state said we’re going to make all Vermonters who don’t currently drive a car purchase auto insurance? Wouldn’t they have to pay for the coverage, in some way, or have someone else pay for it through taxes? You can’t increase the insured pool size and not expect the insurance costs to go up.

But this misses the larger point. Having access to insurance isn’t the goal; having access to health care is the goal. An insurance card won’t stop an arterial bleed; a hospital, physician, and nursing staff will. And as Medicare so ably demonstrates, having insurance does not mean you have access to health care. It’s quite the opposite, as it turns out. The fact that the government’s existing version of single-payer (Medicare) is simply a cost-shift to commercial insurance carriers means, as always, that costs cannot be wished away under the guise of the state’s beneficence.

Ashe has two ideas to help fund this universal coverage, first:

Ashe says he would accomplish this task by taking all the money Vermont already spends on health care for the uninsured, and using it to buy insurance for them instead. He says the state would likely need to find additional dollars as well. And for that money, he says he’d look to the largest cost centers in the health care system: hospitals.

First, Vermont long had a system for insuring the uninsured, called the Vermont Health Care Assistance Program (VHAP). It’s what a hospital would sign a patient up for if they showed up at the hospital with no insurance. A state allocation, partially funded by taxes levied on hospitals, provided the dollars to this fund to insure those people who sought or needed care at the hospital, but had no existing insurance. This program was already up and running, and working. The only net benefit from taking the dollars from this and issuing insurance cards to the uninsured is to, well, make sure the uninsured have insurance cards, and to claim that the state provides universal coverage. In other words, no net tangible improvements to anything, but the state can claim they’ve insured everybody. Which was already occurring.

The state also collects a provider tax, which also goes, in part, to cover the uninsured – so the hospitals are already paying for the uninsured out of their revenues.

And the second idea:

Ashe says the state could take a number of approaches to curbing administrative costs at hospitals. But he says he doesn’t think it makes sense for either legislators or members of the Green Mountain Care Board – the five-person panel that regulates hospital budgets – to be micro-managing medical centers.

This is not a new idea, and not new to any organization that’s trying to reduce costs. That said, assuming that, by whatever vehicle, hospitals will simply find administrative cost savings if mandated to by the state means that the legislature thinks the hospitals are already wasting a lot of money. Even if the legislature states that they are not qualified to tell hospitals how to cut costs (as Ashe does above), yet somehow, miraculously, the legislature just simply knows that there are administrative savings to be had, it absolves the legislature of the responsibility for any cuts that are made, even if the legislature does not mandate which cuts be made. It’s a fundamental contradiction: if you state that you’re not qualified to tell someone how they should cut costs, how can you possibly know that they should be able to cut costs in the places you think should be cut, i.e., administrative costs?

Take that, administrative costs!

This also assumes that a hospital, or any other organization that has a bottom line, is not already cutting costs, eliminating redundancies, etc., as part of normal operations. It also assumes that these other functions, like making sure doctors get paid, that the heat works, that the parking garage is open, that patients are fed, that the floors are cleaned, etc., are somehow superfluous to the organization’s mission, in that they are not found in a direct patient care category.

But by then taking “cost savings” from a hospital and applying them to funding for the uninsured, along with providing insurance from the pool of dollars that’s already in place to insure the uninsured, misses the largest and most critical issue as to why insurance rates go up at such a high clip: The government’s existing version of single-payer does not cover costs, and creates a cost-shift onto commercial payers to cover the difference.

The amount shifted and given away has roughly doubled in 6 years, from 2008 to 2014:

Cost-shifting made easy.

These are hundreds of millions of dollars that are absorbed almost completely in rate increases for commercial insurers. Those shifted costs of care cannot be found in future administrative reductions. There’s no rational way to assume that a hospital is sitting on $100 million in administrative reductions, but just hasn’t quite gotten around to it yet.

Vermont’s aging demographics are the primary reason why those shifts have become larger over time, and that does not look to change in the near future. If you have more people receiving care under Medicare, then the shift can only get larger, and cutting back an IT budget line will not make up a fraction of that difference.

The real culprit in the cost-shift is not the patient, the hospital, or the state legislator – it’s the US government’s version of single-payer, which does not cover costs, and happily shifts that responsibility onto the backs of those people currently working and paying for insurance through their employers, or the self-insured. It’s not only a cost-shift, it’s an income shift – an income re-distribution, one not voted on by elected representatives, but one made possible through decades of bureaucratic sclerosis and an abdication of responsibility by the US Congress, which continually fails to address its own mistakes, and the massive unfunded liabilities it has created.

Like this:

Vermont’s tax revenues are unexpectedly drying up, according to Jeb Spaulding, Shumlin’s Secretary of Administration. From the Vtdigger article:

Good luck, Vermonters!

Financial forecasts predicted more than $115 million would flow into the state’s General Fund during the peak leaf-peeping month. So-called consumption taxes — sales and use, meals and rooms — cleared their targets. But personal income tax receipts fell short by more than $7 million, or 11 percent.

It’s a good idea to think of budgets as a target – you try to hit what you’re aiming at. In other words, if you’re off a little bit, that might not be a big deal. But if there’s a major component of your targeted revenues falling short by over 10%, then that’s a miss. Ask your mortgage company if they’re ok with you “missing” the full payment this month by 10% and see what their reaction is like.

But revenues are off in the form of personal income. Shumlin’s 2015 budget was based, in large part, on projections of revenue growth from FY2013 data, in July of 2013. Fy2013 hadn’t yet closed, FY2014 hadn’t started yet, but those FY13 numbers were used in Shumlin’s Fy2015 budget – the budget year we are now facing shortfalls in.

What did Shumlin’s own FY2015 budget recommendations show for YOY growth in the General Fund revenues, through FY2013? A 1.9% average YOY growth rate (FY2009A through FY14F).

Hey, we’ve had some tough years here – so let’s double our expectations!

What did he propose in the FY2015 budget, for an increase in general fund spending? 3.56%, which he describes as “restrained”.

If you ignore prior history, this seems reasonable – which is kind of a big “if”.

In fact, if you look at the revenue projections from Shumlin’s budget, not just for the General Fund but for other funds, it’s a snapshot of irrational exuberance writ large:

passed, seems to indicate that the 2013 forecasts were wildly optimistic. If you’re trudging back to the statehouse to fix the budget you just spent months finalizing, that means your core assumptions are flawed. The core assumptions, for the biggest revenue component the state has (excluding federal funds, which make up almost 35% of the budget’s revenues – a fact that should startle anyone who thinks Vermont’s budget is solid), will have to be revisited.

“Before entertaining any transition to a new health care system, we need to have a full understanding of who pays today, and how well the system is working today.” Lincoln Rep. Mike Fisher, chairman of the House Health Care Committee.

So now, Democrats are finally getting around to learning the funding mechanisms for the industry they voted to completely overhaul, with the goal of removing all the payers in the system and transforming them into one? This is like like trying to learn how space shuttle engines work 10 minutes before liftoff: “Well, we’re pretty sure it’ll work – fingers crossed!”. Out here in the real world, you can’t buy a house or a car if you can’t afford it, which means someone does an analysis of revenues and expenses prior to execution.

The two words missing in Fisher’s statement are “due” and “diligence”, which, much like the federal health care law, were completely and utterly absent in 2011 when Democrats decided they knew better than anybody else how to manage the largest component of state GDP, while simultaneously putting its implementation off to a much more politically convenient date. Not only have Democrats now admitted they don’t understand the funding mechanism that they voted to completely remake (even though that data is readily available in dozens of different reports, and has been for years – here’s one from 2009), they still don’t have a financing plan for it, a plan that is estimated will exceed the state’s entire annual tax revenue take. The FY2015 budget estimates $1.438 billion in revenue; the estimated cost for Vermont’s single-payer ranges from $1.8 billion and $2.6 billion.

But let’s get back to the legislators’ plans, plans which seem to duplicate existing work that taxpayers have already paid for:

The work that will be done by consultants for the Legislature will in some ways be nearly identical to the analysis being performed by consultants for the Shumlin Administration. They’ll try to determine not just how much individuals and businesses pay in the form of insurance premiums, but also the impact of health care related costs on other household expenses, such as property tax bills.

There are elements of the original analysis done by Dr. Hsaio in 2011 that are not available, which is not an accident, since those elements speak to the funding mechanism (or lack of one) directly. As others have noted,

Not pictured: The taxpayers paying for the marbles in the first place.

That’s not what was sold to Vermonters in 2011 by our elected representatives. Nor was it assumed that the legislature and the governor, both of whom have taken oaths to faithfully execute their offices, would send us down into a dark tunnel without at least thinking to buy some flashlights before we all went in. What this really means, though, is that Democrats are searching for political cover to help their re-election chances in the next several years, but more specifically, after Vermont’s single-payer system blooms into its full flower. Then they will be able to point back to this fine work and claim that they did their job – even if it was three years too late.

The State of Vermont, through its Department of Labor, creates projections of future employment, broken down in many ways but here specifically by industry, as part of its mandate (which includes a lot of other labor-related data, too). These projections aren’t updated annually, but every few years (the data discussed below is from August 2012), and they’re supposed to provide a look forward to where the state’s economic growth, and corresponding tax revenue growth is going to come from.

The Vermont Long Term Industry Projections data is particularly interesting, especially because it provides a snapshot of the employment numbers by industry (using NAICS categorization) from 1988 and 2010, and projections for 2020 based on historical data – and an average annual growth rate by industry using a “compounded formula” (a formula not described on the site).

But the raw employment numbers are there, and it’s worth noting not just the 2010 numbers and their 2020 projections, but the difference in employment numbers in certain industries from 1988 through 2010, and projected through 2020.

Here’s a sample:

Construction of Buildings:

1988 Employment: 6,833

2010 Employment: 3,507

2020 Employment: 4,731

So the projected growth rate is 3.0% (they’re using a formula different than just job growth percentage), but it’s based off the 2010 numbers, not the 1988 numbers. Raw numbers which are down in total employment from 1988 by 48%.

Heavy and Civil Engineering Construction

1988 Employment: 2,429

2010 Employment: 1,740

2020 Employment: 1,872

Again, there’s a positive projected growth rate but the 2010 employment in terms of raw numbers is down 28% from 1988.

Specialty Trade Contractors

1988 Employment: 8,317

2010 Employment: 8,301

2020 Employment: 10,143

This sector is almost virtually the same from 1988 to 2010, but the projections for 2020 have it 25% higher than 1988 and 2010 employment levels. I’m assuming this is based on reasonable growth expectations but the data don’t support that projection, although considering the aging housing stock in Vermont, this would be an opportunity sector.

The Manufacturing sector has a huge reduction from 1988 to 2010, the biggest drop found in the Computer and Electronic Product Mfg sector, which was/is largely IBM, but there were other manufacturers in the 1980’s like GE and Digital.

Manufacturing

1988 Employment: 11,744

2010 Employment: 6,866

2020 Employment: 6,101

It’s not new news, but that sector has been cut in half, and 2020 looks even worse.

Other sectors, like Wholesale and Retail trade, are up or even and projected to go up, but the jobs in these sectors are classically low-paying. If this is your growth sector, your state is in trouble.

Or it’s by design. One of the biggest growth sectors is in the Educational and Health Services Sector, specifically Educational Services, which includes public education.

Educational and Health Services Sector

Educational Services (incl. Public Education)

1988 Employment: 24,732

2010 Employment: 37,872

2020 Employment: 38,940

From 1988-2010, that’s a 53% growth rate. Even as student populations started declining, the state and local employment was grown or maintained. Even the 2020 projection shows roughly another 1,000 employees.

If Peter won’t cut this budget, then I will, Bub.

What the data tells us is clear. The state is open for business as long as the business involves the state, and any other businesses left lying in the gutter, left for dead, might get $4.5 million tossed at them. Or not, if the revenues don’t appear.

But hey, hope springs eternal, in that there might be yet another wealthy Vermonter who miraculously leaves the state with an unanticipated inheritance tax windfall, so the state’s budget can stay in the black.

If we needed more evidence that whatever policies our “leaders” are implementing are not only failing to work, they’ve been

pushing the state in the wrong direction, I’m not sure where else anyone in government would need to look, beyond its own Labor Department data.

There are pictures in the article of legislators applauding each other. Applauding. Note that the biggest elephant in the room, Shumlin’s Single-Payer plan, exists to this day without the legally-mandated funding mechanism for its projected $2.2 billion price tag. To put that expense in perspective, the just-approved budget is $5.1 billion.

Oh, and the state’s still-ignored unfunded pension liabilities? It’s still in the billions – and the legislature continues to avoid addressing this critical financial issue to the detriment of those Vermonters that will be forced to address this kicked can at some

You’ve earned the praise of Costanza.

point down the road.

Why is anyone in Montpelier applauding? The applause should only be coming from Vermont’s citizens, when they’re in receipt of a mass resignation of the Legislature and the Governor for its joint abdication of duties, and violations of public oaths. There’s no justification for celebration here – only a chilling reminder that our body politic does not live in the same Vermont that real Vermonters live in.